A family asked to look at lowering the interest rate of their current mortgage to a new 30 year loan so they could have the lowest payment possible.
After going through the applicaton and pulling their credit, some further analyzing of their total debts and scenarios I found a suggestion to lower their total debt payments, both monthy & over the next five years.
There’s an auto loan that was put onto a credit card with a balance of $8,700 and a monthly payment of $219 . If we are to pay this credit card off, the mortgage payment increases by $59, however the total monthly payment decrase by $162 per month. Multiply this by 60 months, this is a savings of $9,720 just for the credit card being paid off and using the low interest rates.
The average credit card debt for families is $10,000 nationwide. This equates to monthly debt payments of approximately $200 to $300 per month pending on the interest rate(s) of the credit cards.
If you or someone you know has consumer debt that needs to be reduced, there are ways to pay it down much faster than what is curently being done.
After the method of payment is changed, then the gameplan must be followed to ensure that the debt payments do not come back.
Now the key is to not go put another big ticket purchase item on a credit card or high interst rate loans. The preferred method is to pay cash for an automobile. Not all times can a family pay cash and a loan is needed. But you cannot go above and beyond your means with these items either.
The same goes for anything. Families and individuals must be careful so we stay with-in our means so we can be on track to put away for a rainy day. If the discipline is to be frugile, then families can be further ahead.
If you or someone you know need to have assistance with paying down debt, you need to do the math and it’s always wise to have assistance from a professional that can help analyze your total situation to see if what our doing is best or if there is an alternative that may be even better than what the path you are currently on.